Investing in Precious Metals 101 Ad

2013: A Silver Market In Review

Login or register to post comments Last Post 5060 reads   57 posts
Viewing 7 posts - 51 through 57 (of 57 total)
  • Thu, May 08, 2014 - 08:49pm

    #51

    davefairtex

    Status Diamond Member (Offline)

    Joined: Sep 03 2008

    Posts: 3218

    count placeholder

    WT: insightful & multi-talented

JimH-

This is really insightful, and right on.

Yes, WT is insightful and multi talented, but I don't recall you noticing this about him way back when (two days ago) he was having a hard time finding long term trend manipulation in silver prices.  Back then, he was just a shill for the bankers, carrying the water for the cartel, etc, etc.  🙂

Ok, kidding aside, your SDT price chart is fantastic, as was the collection of articles on Seeking Alpha describing the actual production decline rates on the various SD trusts.  I've been looking for things that have real money in them that show off shale oil & gas returns, and these are them.  In the case of SDT, $30 was turned into $7 over the course of two years, and that looks really ugly.  This reminds me of some of those bundled subprime mortgage debt back in 2006.

Of course, whether or not shale wells are a good use of capital depends on the total expected value returned over (say) 10 years of production vs the cost to construct the wells in the first place, and that's the bit that still needs fleshing out – how much did it cost SD to drill these wells?  Perhaps I'm a masochist, but I want to see just how bad the losses are.

I really like these trusts as vehicles for identifying exactly how shale wells perform.  Waiting until all the wells get added seems best, so we can clearly see the decline rates.  Some thoughts:

1) it is possible the wells stuffed into the trust weren't the best ones – perhaps the company kept those and is continuing to operate them.  What's the opposite of cherry-picking – turd-picking?

2) its possible the Mississippi wells perform worse than wells in other areas.  Not all shale performs the same.

Seems like we could gather the data on a number of these trusts and try and intuit the more general picture from the production numbers from the trusts.  Maybe our insightful and multi-talented tracker could help.

One last comment.  US oil production has risen by 2.7 MBPD over the past few years, and no doubt that is due to shale.  Looking at world oil production, we see that the increase over the past few years has been – just about that amount.  Without US shale, the world overall would have been on the "undulating plateau" rather than rising.

Ok, another last comment: I love this discussion!

  • Thu, May 08, 2014 - 09:11pm

    #52

    Chris Martenson

    Status Platinum Member (Offline)

    Joined: Jun 07 2007

    Posts: 4740

    count placeholder

    Indeed, very good discussion!

[quote=davefairtex]

2) its possible the Mississippi wells perform worse than wells in other areas.  Not all shale performs the same.

Seems like we could gather the data on a number of these trusts and try and intuit the more general picture from the production numbers from the trusts.  Maybe our insightful and multi-talented tracker could help.

[/quote]

Let me just toss in a couple of clarifying comments here.

The Mississippian Trust has assets in KA and OK, under which lies the Mississippian shale formation.  That's the same formation that Shell pulled out of calling it a dog.  Well, not in so many words since they were trying to unload their assets there on someone, but reading between the lines was easy enough.

So that's kind of a bad play and I'm not surprised that a trust based on that is doing poorly.

What does surprise me is that even after the horrendous performance of the underlying asset that the trust is still trading at a premium to "NAV" which I have placed in quotes because the "NAV" has been steadily downgraded over time.

OK, so hopes springs eternal in investors, so why am I surprised that they are clinging to hope on this one?  

Because there are so many other placed to park your money!  How about in the Arcana oil and gas index (XOI)?  That's had a full double since 2009 and is on an absolute tear this year.

Hmmmm….I wonder what this index 'knows' that I should know?

  • Thu, May 08, 2014 - 10:39pm

    #53

    Wildlife Tracker

    Status Silver Member (Offline)

    Joined: Jan 14 2012

    Posts: 405

    count placeholder

    Thanks guys!

This really has been a great discussion. Every contribution has been really productive and enjoyable.

I'm really excited to follow the silver pattern that we discovered and seeing how that plays out, and certainly a similar chart for gold needs to be made. Thanks!

  • Fri, May 09, 2014 - 01:57pm

    #54
    mikekep

    mikekep

    Status Member (Offline)

    Joined: Feb 05 2014

    Posts: 3

    count placeholder

    thank you for the thoughtful

thank you for the thoughtful reply.  You did clarify much about the inputs to silver production.  So, your opinion is that a considerable market decline and potentially a recession in the next 12 months would not cause more downward pressure on silver prices.  In 2008-2009 in the sell off, a lot of money went into "safe assets", which at the time were US Treasuries.  I see the case for those feeling less safe and some money moving into gold… and silver, by extension.

  • Sat, May 10, 2014 - 12:32pm

    #55

    KugsCheese

    Status Gold Member (Offline)

    Joined: Jan 01 2010

    Posts: 844

    count placeholder

    NDEXNYSEGIS:XOI?

Why doesn't that graph show the plunge in oil price ~July 2008?

  • Sat, May 10, 2014 - 08:17pm

    #56
    Cornelius999

    Cornelius999

    Status Bronze Member (Offline)

    Joined: Oct 17 2008

    Posts: 365

    count placeholder

    Thanks for sharing the great

Thanks for sharing the great silver graphs WildlifeTracker

  • Sat, May 10, 2014 - 09:29pm

    #57

    Wildlife Tracker

    Status Silver Member (Offline)

    Joined: Jan 14 2012

    Posts: 405

    count placeholder

    Cornelius

Thanks for actually taking a look at them! 

Viewing 7 posts - 51 through 57 (of 57 total)

Login or Register to post comments